debate continued, Bond vs. RE, on 67k home sold 270k in 2010...

debate continued, Bond vs. RE, on 67k home sold 270k in 2010...


haha, first I want to thank Murmur.on.hudson, 听松云涛深处, 天下攘攘 and sunskitehomes, on helping clear up the idea....

on the bond side, 听松云涛深处, 天下攘攘 both come up with the compound interest rate for bond from 1980 to 2010, at 10.2x%, so from 1980 to 2010, 67k become $1,265,199.

but my conclusion was inconclusive, I have to take in consideration of rent collected, should also earning interest as time goes...

so, base on that, I also take in consideration of property tax and insurance cost, about 20% of the rent collected each year, I did the following excel sheet..

using the rent number $300 from 1980, to $2700 in 2010 (1% of the purchases price), rate of increase is 7.875%, then deduct 20% for tax and insurances, remaining rent earns same interest rate as bond..

rent rent increase per year cash on hand interest rate cash in Bank year end cash
1 300.00 2880.00 2880.00 0.00% 2880.00 2880.00
2 323.63 7.875% 3106.80 2880.00 14.00% 3283.20 6390.00
3 349.11 7.875% 3351.46 6390.00 14.00% 7284.60 10636.06
4 376.60 7.875% 3615.39 10636.06 14.00% 12125.11 15740.50
5 406.26 7.875% 3900.10 15740.50 14.00% 17944.17 21844.27
6 438.25 7.875% 4207.23 21844.27 14.00% 24902.46 29109.70
7 472.77 7.875% 4538.55 29109.70 14.00% 33185.05 37723.61
8 510.00 7.875% 4895.96 37723.61 14.00% 43004.91 47900.87
9 550.16 7.875% 5281.52 47900.87 14.00% 54607.00 59888.52
10 593.48 7.875% 5697.44 59888.52 14.00% 68272.91 73970.35
11 640.22 7.875% 6146.11 73970.35 14.00% 84326.20 90472.31
12 690.64 7.875% 6630.12 90472.31 9.00% 98614.82 105244.94
13 745.03 7.875% 7152.24 105244.94 9.00% 114716.98 121869.23
14 803.70 7.875% 7715.48 121869.23 9.00% 132837.46 140552.94
15 866.99 7.875% 8323.08 140552.94 9.00% 153202.70 161525.78
16 935.26 7.875% 8978.52 161525.78 9.00% 176063.10 185041.61
17 1008.91 7.875% 9685.58 185041.61 9.00% 201695.36 211380.93
18 1088.37 7.875% 10448.31 211380.93 9.00% 230405.22 240853.53
19 1174.07 7.875% 11271.12 240853.53 9.00% 262530.35 273801.47
20 1266.53 7.875% 12158.72 273801.47 9.00% 298443.60 310602.32
21 1366.27 7.875% 13116.22 310602.32 9.00% 338556.53 351672.75
22 1473.87 7.875% 14149.12 351672.75 7.00% 376289.84 390438.96
23 1589.93 7.875% 15263.36 390438.96 7.00% 417769.69 433033.06
24 1715.14 7.875% 16465.35 433033.06 7.00% 463345.37 479810.73
25 1850.21 7.875% 17762.00 479810.73 7.00% 513397.48 531159.48
26 1995.91 7.875% 19160.76 531159.48 7.00% 568340.64 587501.40
27 2153.09 7.875% 20669.67 587501.40 7.00% 628626.50 649296.17
28 2322.65 7.875% 22297.41 649296.17 7.00% 694746.90 717044.30
29 2505.55 7.875% 24053.33 717044.30 7.00% 767237.40 791290.73
30 2702.87 7.875% 25947.53 791290.73 7.00% 846681.08 872628.61

at the end of 30 years, 872628.61+270000 = 1,142,628.61

bond win and RE lost...

haha, now for RE investors, we all know the golden rule of RE is 1% rent on purchase price, which will guarantee a positive cash flow, base on that...

rent rent increase per year cash on hand interest rate cash in Bank year end cash
1 760.00 7296.00 7296.00 0.00% 7296.00 7296.00
2 793.93 4.465% 7621.77 7296.00 14.00% 8317.44 15939.21
3 829.38 4.465% 7962.08 15939.21 14.00% 18170.70 26132.77
4 866.42 4.465% 8317.59 26132.77 14.00% 29791.36 38108.95
5 905.10 4.465% 8688.97 38108.95 14.00% 43444.20 52133.16
6 945.51 4.465% 9076.93 52133.16 14.00% 59431.81 68508.74
7 987.73 4.465% 9482.21 68508.74 14.00% 78099.96 87582.17
8 1031.83 4.465% 9905.59 87582.17 14.00% 99843.67 109749.27
9 1077.90 4.465% 10347.88 109749.27 14.00% 125114.17 135462.04
10 1126.03 4.465% 10809.91 135462.04 14.00% 154426.73 165236.64
11 1176.31 4.465% 11292.57 165236.64 14.00% 188369.77 199662.34
12 1228.83 4.465% 11796.79 199662.34 9.00% 217631.95 229428.74
13 1283.70 4.465% 12323.51 229428.74 9.00% 250077.33 262400.84
14 1341.02 4.465% 12873.76 262400.84 9.00% 286016.91 298890.67
15 1400.89 4.465% 13448.57 298890.67 9.00% 325790.83 339239.40
16 1463.44 4.465% 14049.05 339239.40 9.00% 369770.95 383820.00
17 1528.79 4.465% 14676.34 383820.00 9.00% 418363.80 433040.14
18 1597.05 4.465% 15331.64 433040.14 9.00% 472013.75 487345.39
19 1668.35 4.465% 16016.20 487345.39 9.00% 531206.48 547222.67
20 1742.85 4.465% 16731.32 547222.67 9.00% 596472.71 613204.03
21 1820.66 4.465% 17478.37 613204.03 9.00% 668392.40 685870.77
22 1901.96 4.465% 18258.78 685870.77 7.00% 733881.72 752140.50
23 1986.88 4.465% 19074.04 752140.50 7.00% 804790.34 823864.38
24 2075.59 4.465% 19925.69 823864.38 7.00% 881534.88 901460.58
25 2168.27 4.465% 20815.37 901460.58 7.00% 964562.82 985378.19
26 2265.08 4.465% 21744.78 985378.19 7.00% 1054354.66 1076099.45
27 2366.22 4.465% 22715.69 1076099.45 7.00% 1151426.41 1174142.09
28 2471.87 4.465% 23729.94 1174142.09 7.00% 1256332.04 1280061.98
29 2582.24 4.465% 24789.48 1280061.98 7.00% 1369666.32 1394455.80
30 2697.53 4.465% 25896.33 1394455.80 7.00% 1492067.71 1517964.04



1517964.04 + 270000 = 1,787,964.04

RE wins..

so, now we know the golden rule is truly golden..haha, just for fun...

所有跟帖： 

• Well, the only exception is if I were Bill Gates -Conehead- ♂ (56 bytes) () 09/16/2010 postreply 08:45:23

• at 10% rate, I would buy bond -sunskitehomes- ♂ (242 bytes) () 09/16/2010 postreply 09:02:59

• 回复：at 10% rate, I would buy bond -blocked- ♂ (205 bytes) () 09/16/2010 postreply 09:08:53

• It did happen in 70's :-) -Conehead- ♂ (0 bytes) () 09/16/2010 postreply 09:11:25

• 讨论的关键不是过去,是利率从现在的0.25%走向哪里 -murmur.on.hudson- ♂ (439 bytes) () 09/16/2010 postreply 09:05:51

• I suggest you go back to 70's to see how the housing -Conehead- ♂ (62 bytes) () 09/16/2010 postreply 09:10:23

• 你是说这个70年代的房产? -murmur.on.hudson- ♂ (92 bytes) () 09/16/2010 postreply 09:27:24

• You just proved my view :-) -Conehead- ♂ (322 bytes) () 09/16/2010 postreply 09:34:16